    [Public Papers of the Presidents of the United States: George W. Bush (2004, Book III)]
    [December 16, 2004]
    [Pages 3109-3117]
    [From the U.S. Government Publishing Office www.gpo.gov]

    Remarks at the Closing of the White House Conference on the Economy
    December 16, 2004

        The President.  Thank you all very much. Go ahead and sit down.
    First, thank you all for participating in this important series of
    seminars and speeches. I really thank you for sharing your time during
    what is a busy season. I particularly want to thank those who served on
    our panels for speaking clearly and helping people understand some of
    the issues that face our country. You know, it may be just that the
    panel on tax and regulatory burden could become the beloved holiday
    tradition here in Washington. [Laughter]
        I really appreciate the different backgrounds of the people who
    spoke. We had your entrepreneur. We had your academic. We had your
    corporate leader. We just had plain old citizens show up. And I really
    want to thank you. The panels I participated in I thought were great.
        It seems like to me there's some common themes that came through the
    discussions. First, our economy has come through a lot, and it's
    growing. I think people realize that, and that's positive. And there's a
    reason why people say it's growing, besides me, and that's because the
    facts say it's growing. I mean, we're growing at a pretty healthy rate
    of 4 percent over the last year. New jobs are being added. The
    manufacturing sector appears to be stronger. After all, they added
    86,000 new jobs since January. Housing ownership and housing starts are
    still very robust and strong. Interest rates and mortgage rates are low.
    And there's the ingredients for growth available.
        And what I also heard was that the good news shouldn't make us
    complacent. And I'm certainly not. The--one, I understand there's some
    areas of our country which are still struggling. I saw that firsthand
    during this past 90 days of active travel. There are some challenges as
    well that we heard about that we better get after and address now,
    before it's too late. And I intend to work with Members of the Congress
    and members here in this audience in the beginning of a new term to
    address the problems.
        And here's how I see some of the problems. One, we need to update
    our Tax Code. It needs to be easier to understand and more simple. We
    need to make sure our health care system meets the needs of tomorrow.
    It's got to be flexible in its application. Consumers have got to have
    more say in the market. We need to reform our legal systems so the
    people, on the one hand, can get justice; on the other hand, the justice
    system doesn't affect the flows of capital.
        Members of both parties are going to have to get together to work on
    this. This is not one of these series of issues that

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    require a--one-half of the body to participate. These issues are big
    enough for all of us to need to work together. These are compelling
    national issues that require a national response.
        I will work hard as the President to get rid of zero-sum politics in
    Washington that says, ``Old George does fine if this passes, and my
    party doesn't.'' We've got to get rid of that. It's got to be that we
    all take risk and share risk and share in the rewards, so that this
    notion about one party benefits over the other if we happen to do
    something positive for our Nation no longer is the pervasive psychology
    here in Washington, DC.
        And I will remind people here in Washington that now is the time to
    confront problems. It's so much easier, in politics and in policy, to
    pass big problems on to future generations. That's an easy pass. But I
    didn't come up here to Washington--and I know a lot of people in my
    Cabinet didn't agree to serve--to pass problems on. I like to confront
    problems. I like to work with people so that we can say we left behind a
    better America after it's all said and done. And I don't have that much
    time here in Washington, so I'm going to--so I'm ready to work. And I
    want to thank you all for helping us highlight the issues that we have
    to work on.
        I want to thank the members of my Cabinet. I'm so pleased to be
    working on these problems with a fine Secretary of Treasury, John
    Snow. You still have a Ph.D., right? [Laughter]
    In spite of that, I'm confident we can get a lot done here in
    Washington. [Laughter]
        I want to thank my friend Donnie Evans,
    who's served so admirably here in 4 years. I'm going to miss him when he
    goes back to Texas. I appreciate Elaine Chao's service as the Secretary of Labor, and I'm pleased she'll
    be with this administration to work on these issues. Joshua
    Bolten, member of my Cabinet, head of the
    OMB--thanks for being here, Josh. Thanks for your good work. And
    finally, the Director of my National Economic Council, Steve
    Friedman, has done a fabulous job. He has
    decided to go back into the private sector, for which I am a little
    hostile. [Laughter] But I appreciate your service, friend. Good job.
        One of the tests of leadership at all levels of government is to
    confront problems before they become a crisis. And we've heard about
    some of the problems. Let me refresh your memories about the problems we
    have discussed. First, we've heard a lot about the growing burden of
    lawsuits. We have a litigious society, and it is a problem that is clear
    and a problem that we will confront.
        According to a recent study, frivolous litigation has helped drive
    the total cost of America's tort system to more than $230 billion a
    year. That's a lot of lawsuits. The figure is more than twice the amount
    Americans spent on automobiles in 2002. A study published this summer
    showed that tort liability costs for many small businesses run at about
    $150,000 a year. That is a significant burden for a small business to
    bear. We believe, and many of you have--believe that that money can be
    better spent, that it's possible to have a justice system that is fair
    and balanced, that if you have a claim, you should be able to go to an
    uncluttered court to have your claim adjudicated.
        Tort costs in America are far higher than any other major
    industrialized nation. That is bad news for America. It means that other
    nations are able to have a judicial system that is fair and balanced,
    and we're not. It puts us at a competitive disadvantage. And in a world
    that is more closely knit, America and American workers cannot afford to
    be at a competitive disadvantage.
        And lawsuits can just plain ruin somebody's life. Donnie headed a
    seminar yesterday, and I happened to be there, and we heard the story of
    Hilda Bankston. I think Hilda is probably
    still here. There you go. First of all, Hilda was born in Nicaragua--
    verdad?
        Hilda Bankston. Guatemala.

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        The President. Guatemala--see, I wasn't paying very close attention.
    [Laughter] Maybe I'll get the rest of the story right here. [Laughter]
    It's okay to correct the President, just not in front of all the TV
    cameras. [Laughter]
        She and her husband, Mitchell, owned a drugstore in Fayette, Mississippi. I've
    never been to Fayette. I suspect it's one of those classic town squares
    in a southern city where the pharmacist is an integral part of the
    community. People come and go; people probably like to hang out and dig
    the latest gossip and all that--talked about the high school football
    team. The store got swept up in massive litigation just because it
    dispensed prescriptions--certain prescriptions. Small pharmacy, main
    square, Fayette, Mississippi, and a class action lawsuit sucks them into
    the legal system. She sold the pharmacy 5 years ago. She has spent
    countless hours being drug into the court system.
        Here's what she said. She said, ``My
    husband and I lived the American Dream
    until we were caught up in what has become an American legal
    nightmare.'' She went on to say, ``I'm not a lawyer, but to me,
    something is wrong with our legal system when innocent bystanders are
    little more than pawns for lawyers seeking to strike it rich.''
        All Hilda asked for is a fair system, and
    the system right now isn't fair in this case. And we've got to do
    something about it. We've got to do something about it to make sure
    we're competitive. We've got to do something about it to make sure that
    there's not excessive costs, and we've got to do something about it to
    make sure people like Hilda don't get hurt by a system that was designed
    to protect people, not hurt people.
        The people in Congress must know that excess litigation is not only
    a drag on our economy, but it is a constant source of fear and
    uncertainty--creates fear and uncertainty for people in the business
    community. To keep the economy growing strong in the future, we have got
    to lift the burden and reform our legal systems. The Nation needs class
    action lawsuit reform. The Nation needs to have asbestos legal reform.
    And this Nation needs medical liability reform. I'm looking forward to
    working with Congress to get legal reform done quickly in the upcoming
    legislative session.
        We also heard about the rising cost of health care, which restricts
    access for our families and it makes it harder for employers to cover
    their workers. This problem is clear, and it will be confronted.
        More than half of the uninsured Americans work for small businesses.
    Small-business owners know their employers well, and the ones I've
    talked to understand they have an obligation and a duty to help take
    care of them. But there's some times they're just not able to do so,
    particularly in the society in which we live today. After all, health
    care premiums have risen by 83 percent per employee over the last
    decade.
        I just mentioned medical liability reform. There is no doubt in my
    mind, by passing real, substantive medical liability reform, it will
    help control the rising costs of health care. I believe small businesses
    should be allowed to join together to pool risk so they can negotiate
    for health care contracts just like big companies are able to do. And
    I'm pleased to report that we're--health savings accounts are beginning
    to work their way through our markets. After all, I just signed up for
    one 2 days ago. When it makes it to my level, you know it's going to be
    widespread these days. [Laughter] HSAs are making a difference.
        Chris Krupinski owns an art and design
    studio in Fairfax. I talked to her last night. She's pretty enthusiastic
    about HSAs. If you didn't hear her talk, you should have. First of all,
    she is a--she went to insurance agent after insurance agent after
    insurance agent trying to find something she could afford, and
    eventually, she was paying $900 a month for insurance for she and her
    family. Then she heard about health savings accounts, innovative ways
    for people to cover

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    catastrophic care for their family, at the same time manage the cashflow
    needs--their own cashflow needs so they can provide primary care as
    well. Now she pays $340 a month for a high-deductible plan, and she puts
    $290 a month into her HSA--puts her own money in, money that will earn
    interest tax-free, money she can take out tax-free, money that's her own
    money, and she's saving money for her family at the same time. In other
    words, this innovative plan enables her to control her own destiny when
    it comes to health care and, at the same time, provides her comfort in
    knowing that if there is a catastrophe, the health insurance will cover
    it for she and her family. She's paying less overall. She chooses her
    own doctor. She saves her own money, and she makes the health care
    decisions.
        Fast-rising medical costs are a drag on this economy, and so there
    are some things we need to do together: One is expand health savings
    accounts; two, promote association health care plans--Congress needs to
    allow small businesses to pool risk; three, pass medical liability
    reform; four, continue to expand information technology throughout the
    health care system; five, move generic drugs faster to the market. In
    all we do, in all we do to reform health care, we've got to make sure
    the decisions are made by doctors and patients, not by bureaucrats in
    our Nation's Capital.
        A lot of talk in this conference about the Tax Code and Federal
    regulations and the fact that regulations and the Tax Code cost billions
    of dollars a year. In the campaign, in the course of the campaign, I
    said to people, ``The Tax Code is a complicated mess.'' Most people
    understood what I was talking about. Americans spend about 6 billion
    hours a year in filling out their tax returns, or at least trying to
    fill them out. [Laughter] The short form takes more than 11 hours to
    prepare. That's about the same amount of time it took to fill out the
    long form 10 years ago.
        In the last 4 years, we passed major tax relief, and some of it is
    getting ready to expire. Take, for example, the death tax. It's getting
    ready to--the relief is getting ready to expire. In other words, the
    tax--death tax in 2011 is going to come back into being. Frankly, it's
    going to make estate planning awfully interesting in the year 2010.
    [Laughter] I want you to know that the death tax takes up more than 300
    pages of laws and regulations in the current Tax Code. By getting rid of
    the death tax forever, we have simplified the code by 300 pages.
        And not only that, I think it's good public policy. And so does
    Craig Lang. I met him before. He's a dairy farmer
    from Brooklyn, Iowa. His family farm has been in the family since 1860.
    That's when his great-great-grandfather arrived in Iowa. I wonder if he
    arrived from Brooklyn, New York. That would have been interesting,
    wouldn't it? [Laughter] Kind of the life goes full cycle thing. Anyway,
    Craig wants his children, of course, to inherit the farm. When we talk
    about the family farm, one way to make sure the family farm remains a
    family farm is that family members run the farm after the current
    generation moves on. He now, in order to deal with the death tax, which
    I hope expires forever, is now working with a lawyer, a CPA, and an
    insurance agent, just so he can structure things correctly to keep the
    farm in his own family.
        Here's what he said. He said, ``We pay
    property taxes. We pay income taxes, and we pay sales taxes every year.
    It's simply not fair to be taxed again for creating wealth.'' I think
    Craig has got a lot of dairy farmer wisdom. [Laughter] I believe, in
    order to keep this economy growing, in order to send the right message
    to people who are willing to risk capital, all the tax relief we passed
    must be made permanent. And that includes the repeal of the death tax.
        But I also understand that in order to deal with budget deficits,
    which we discussed the morning--this morning, we

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    need to be tough when it comes to Federal spending. I look forward to
    working with Josh. Josh's job is to develop
    a budget that meets priorities and shows fiscal restraint. We believe
    it's possible to do so. As a matter of fact, we not only believe it's
    possible; we believe it is necessary to do so. It is important for our
    fellow citizens to know we're willing to prioritize. It's important for
    the markets to see that we've got enough discipline in Washington, DC,
    to make hard decisions with the people's money.
        I look forward to finishing our budget deliberations inside the
    White House. Upon completion, Josh will be
    sharing the news with the Members of Congress and the public. You will
    see fiscal discipline exercised inside the Oval Office this coming
    budget cycle.
        We understand the effects of paperwork on our administration. Again,
    Josh is in charge of making sure that this
    administration culls out, as best as possible, unnecessary regulation.
        I used to tease people when I was campaigning. We'd have these
    small-business forums--I see one of our participants over here--and I
    would say that I know you fill out paperwork, but what I don't know is
    whether anybody ever reads it in Washington. [Laughter] So one thing for
    certain is we've got to make sure that the paperwork which is never read
    is eliminated to the best extent possible, so our small businesses, in
    particular, and big businesses are able to focus their energies and
    their time and their capital on job creation.
        I'm going to appoint a citizens panel to study the Tax Code and
    recommend simplification proposals. Secretary Snow will be charged with
    that effort. The members of the panel will, of course, include tax
    experts. It will also have people who aren't experts--well, they're
    experts; they'll be experts in paying tax. [Laughter] The idea is to
    take a look at what's possible, what is necessary, and work with
    Congress to get something done to simplify the Tax Code. Now is the time
    to take on this important task.
        In the conference, we heard much about the problems in the education
    system, which is not fully preparing our citizens for the jobs of the
    future. There is no doubt in my mind that if we expect to remain
    competitive in the world, we must educate every child.
        Here is a startling statistic: Most new jobs in America are filled
    by people with at least 2 years of college. That's startling. What makes
    it even more startling is the fact that only one in four of our students
    gets there. That's a learning gap that must be closed. Twenty-five of
    the thirty fastest growing jobs in America require an education beyond
    high school. The median salary for someone with college experience is 69
    percent greater than for someone who never attended college. That's a
    pretty good selling point, to say to somebody, ``We want you to go to
    college.''
        Kay Haycock described the challenge--Kati
    Haycock described the challenge this way here at this forum. She said,
    ``There are a huge number of American kids who are doing all the things
    they're supposed to do in high school and don't come close to having the
    skills and knowledge they need to succeed.''
        We started to change the system here in Washington with the No Child
    Left Behind Act. I understand that it's created some consternation. And
    it's created consternation because, in return for increased Federal
    spending, we finally started asking the question, ``Can you read and
    write and add and subtract?'' It's never seemed to me--for some, that's
    called an unfunded mandate. To me, that's called a necessary mandate, to
    make sure our children can learn.
        All people who understand the importance of accountability are
    people who need to meet a bottom line, are people who are held
    accountable for signing up more accounts. Accountability is, in my
    judgment,

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    crucial to making sure no child is left behind. How can you determine
    whether or not the curriculum--the reading curriculum you are using is
    working if you don't measure? How do you know whether or not the teacher
    training is working if you cannot measure to determine whether or not
    the pupils of a particular teacher are able to meet certain standards?
    How do you know how your school is doing relative to the school next
    door to you? How do you know how your State is doing relative to the
    State next door to you? How do you know how your children are doing
    relative to the world? You don't, unless you measure.
        Secondly, measuring allows you to correct problems early. And so
    what we have done here in Washington, DC, is we have said, ``In return
    for extra Federal money, we are going to insist that you measure.''
    Notice I didn't say there would be a Federal test. That removes
    accountability away from those who are responsible for educating. It
    says, ``You develop a test. You develop accountability standards''.
    We'll norm it around the country in a reasonable way without undermining
    local authority, but we want to know. We want to know. And where there's
    success, we'll help you heap praise upon those who deserve success. But
    where there's failure, we will collectively blow the whistle so that we
    start getting it right.
        There is nothing worse than a school system--and I--you know, I was
    a Governor at one time, and I remember excuse-laden school systems. And
    I remember people going, ``Oh, my goodness, all of a sudden we're
    graduating children who can't read.'' And so we decided to do something
    about it, and that is get it done early, before it's too late. The No
    Child Left Behind Act is going to make a significant difference so long
    as Congress doesn't try to water it down.
        And now we need to bring high standards and accountability to our
    high schools. And we've got to make sure our job training programs are
    working, that the job training programs actually train people for the
    jobs that exist, which means consolidation and flexibility.
        I'm a big believer in the community college system in America. I
    think community colleges can help us address the needs and fill the
    achievement gap. I know community colleges are market-oriented places of
    higher education. They're affordable. They're accessible, and they're
    able to adjust to the demands of the local economy.
        Some of the most hopeful moments I've had as President have gone
    into communities and have seen the curriculum of a community college
    that has been adjusted to the demands of the local employer base, so
    that if jobs were lost, for example, in the North Carolina textile
    industry, there was an active, viable, vibrant community college system
    able to train workers to become nurses in the health care industry that
    was creating enormous amounts of jobs. The community college system and
    higher education, itself, must become--every young person must access
    our community college system and be prepared to do so--or higher
    education, in order for our economy to remain competitive as we head
    into the 21st century.
        Social Security reform, entitlement reform is an important topic we
    discussed today. You know, there's a--we talk about the deficit, and
    there is a short-term deficit here in Washington, which we're going to
    close in half over a 5-year period of time. But there is a long-term
    deficit as well. And that long-term deficit really is the unfunded
    liabilities of the entitlement programs which make up roughly two-thirds
    of the United States budget.
        One of the things that we heard today from experts was that the
    Social Security system is safe today but is in serious danger as we head
    down the road of the 21st century. And this problem has got to be
    confronted now. And we heard from people that know what they're talking
    about on this stage this morning, saying that it is

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    a far easier problem to manage today than it will be if we continue
    postponing solutions.
        In 1950, there were 16 workers paying for every beneficiary. Today,
    there are about three, and when the younger workers retire, there will
    be only two workers per beneficiary. That should be a warning signal for
    those of us who are charged with having to confront problems and not
    pass them on to future Congresses or future generations. The system
    becomes untenable within a relatively quick period of time. The Social
    Security system is in the black today but in the long term has $10.4
    trillion in unfunded liability. That's trillion with a ``T.'' That means
    that a 20-year-old worker today is being promised retirement benefits
    that are 30 percent higher than the system can pay. By the year 2018,
    Social Security will pay out more in benefits than the Government
    collects in payroll taxes. And once that line into red has been crossed,
    the shortfalls will grow larger with each passing year. We have a
    problem.
        Now, some will say, ``Well, that's 2018. I'm not going to be
    around.'' But I don't think that's what a good public servant thinks--
    should think. I think somebody who is charged with responsibly
    representing the people must look at the data that I just described and
    say, ``Now is the time to work together to confront the problem.'' I
    understand how Government works. Congressman Penny was talking about the last time we dealt with the Social
    Security issue in a real earnest way was when there was a crisis.
        A lot of Government, if the truth be known, is crisis-oriented
    management. You know, we wait and wait and wait, and then the crisis is
    upon us and everybody demands a solution. The problem with that when it
    comes to a modernization of Social Security is, is that the longer we
    wait, the more expensive the solution becomes. And so one of my jobs,
    one of my charges is to explain to Congress as clearly as I can, the
    crisis is now. You may not feel it. Your constituents may not be
    overwhelming you with letters demanding a fix now, but the crisis is
    now. And so why don't we work together to do so. I will also assure
    Members of Congress that this is an issue on which I campaigned, and I'm
    still standing. In other words, it's a--[applause].
        If anybody is interested in the politics of Social Security, here's
    my view. First of all, what has made Social Security a difficult issue
    to discuss is that many times when you discuss it, a flier would follow
    your discussion telling certain people in our society, generally those
    who have been on Social Security, that they're not going to get their
    check. I mean, that is fairly typical politics in the past. It really
    has been. And so people were afraid to address the issue, and I can
    understand why. If you talk about reforming Social Security, modernizing
    Social Security, you would get clobbered politically for it.
        But that dynamic began to shift recently--recently being, I think
    the 2000 election. President Clinton,
    after the '96 election, had a lot of very important panels on the
    subject. He began to lay the groundwork for substantive, real change. He
    felt comfortable discussing it. I felt comfortable campaigning on it in
    two elections. I'll tell you why: Because once you assure the seniors
    that nothing will change, you're really speaking to people that don't
    believe they're going to get a check at all, and that is the younger
    generation coming up. And therefore, the dynamic has shifted. And
    therefore, there's millions of people wondering whether or not the
    Government has the courage to do something to make sure a younger
    generation will have a viable retirement system available when they
    retire. And that's how I see the issue.
        I did talk about some principles during the course of the campaign:
    One was, nothing will change if you're retired or near retirement; two,
    I do not believe we should raise payroll taxes to try to fix the system;
    three, I do believe younger workers ought to be allowed to take some of
    their own

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    money, some of their own payroll taxes, and, on a voluntary basis, set
    up a personal savings account, an account that will earn, an account
    that they manage, an account that earns a better rate of return than the
    current--that their money earns inside the current Social Security
    trust, an account that they can pass on from one generation to the
    next--in other words, it's your asset--and an account the Government
    can't take away.
        I am--one of my strong beliefs is that all public policy, to the
    extent possible, ought to encourage ownership in America. I believe in
    owning things. I think it will be healthy for our system for people to
    own and manage their own retirement account. It will cause them to have
    a vital stake in public policy. People will ask more questions about
    fiscal responsibility than ever before. People will want to watch
    carefully decisions made by Government at all levels if they have a
    vital stake in watching their portfolio grow.
        I will also say again, like we said this morning, that people are
    not going to be allowed to take their own money for their retirement
    account and take it to Vegas to shoot dice. [Laughter] This is going to
    be a managed account, similar to the Thrift Savings Plans that we
    Federal employees have available to us now.
        These challenges I've just discussed are important challenges. They
    are big agenda items, but they should be. I mean, why think little when
    it comes to making sure America is still the center of excellence in the
    world? Great economies do not get weak all at once. They're kind of
    eaten away, you know, year by year, by challenges that people just
    refuse to meet. Slowly but surely, an economy, a great economy, can be
    eroded to the point of mediocrity. This Nation must never settle for
    mediocrity. This Nation must always, always strive for the best and
    leave behind a better America for our children and our grandchildren.
        And so we've got to confront the problems I just talked about, and I
    want to thank you all for coming to highlight the problems. I assure you
    that I understand that success in dealing with these problems will
    require strong cooperation in Washington, that I have a responsibility
    to reach out to members of both political parties, and I will meet that
    responsibility. I look forward to working with you all to help make
    clear that not only are the problems existing but there's reasonable
    solutions to solve them.
        In all we do, we've got to make sure that the American economy is
    flexible. One of the reasons why we're a great place in the world for
    people to do business and realize their dreams is because we have a
    flexible economy. We've got to make sure that we're always a competitive
    economy, we're willing to accept competition and take competition on. I
    happen to believe competition makes this a better world rather than a
    worse world. We've always got to stay on the leading edge of innovation.
    There's always got to be a proper role between Government and the
    economy. The role of Government is not to create wealth. The role of
    Government is to create an environment in which the entrepreneurial
    spirit is strong and vibrant.
        And as I said this morning, when we meet these challenges, we can
    say to ourselves and perhaps other generations will eventually say about
    us, ``Well done. You did the job you're supposed to do.''
        Thank you for helping us do our job. God bless. Thank you all.

    Note: The President spoke at 1:27 p.m. at the Ronald Reagan Building and
    International Trade Center. In his remarks, he referred to Kati Haycock,
    director, Education Trust, Washington, DC; and former U.S.
    Representative Timothy J. Penny, senior fellow, Hubert H. Humphrey
    Institute of Public Affairs, University of Minnesota. The Office of the
    Press Secretary also released a Spanish language transcript of these
    remarks.

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